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A Year in Review: 2020 Audit Committee Forum Highlights

Apr 08, 2021

On April 8, 2021, the Canadian Public Accountability Board (CPAB) released highlights from their 12 forums held in 2020 for audit committee chairs and chief financial officers of Canadian reporting issuers to discuss the impact of COVID-19 on the financial reporting and audit quality in various industries, including real estate, mining, energy and financial institutions.

Review the audit committee forum highlights on the CPAB's website.

AICPA’s proposed new quality management standards aim to enhance and maintain a CPA firm’s audit quality

Feb 04, 2021

On February 4, 2021, the American Institute of CPAs’ (AICPA) Auditing Standards Board (ASB) issued the exposure draft (ED), "Proposed Quality Management Standards", that includes three interrelated standards that address the way CPA firms manage quality for their accounting and auditing practices. The standards offer a new proactive, risk-based approach to effective quality management systems within CPA firms, which will improve the scalability of the standards and promote a system tailored to the firm and its engagements.

The ED aligns with the International Auditing and Assurance Standards Board’s (IAASB) quality management standards. The proposed standards include changes such as using the terms quality management and engagement quality review instead of quality control and engagement quality control review, respectively, used in the current standards.

The three proposed standards are:

  • Proposed Statement on Quality Management Standards (SQMS) A Firm’s System of Quality Management
  • Proposed SQMS Engagement Quality Reviews
  • Proposed Statement on Auditing Standards (SAS) Quality Management for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards

Review the press release and exposure draft on the AICPA's website.

Appointments – AASOC and the AASB

Mar 18, 2021

On March 18, 2021, the Auditing and Assurance Standards Oversight Council (AASOC) and Auditing and Assurance Standards Board (AASB) announced new members and re-appointed members to the Council and the AASB.

Here are the new appointments from Deloitte Canada:

AASOC appointments

Appointed as a member for a three-year term ending on March 31, 2024:

  • Donald Newell, FCPA, FCA, ICD.D, B. Comm, Senior Partner (ret.), Deloitte LLP

Review the announcement on the AASB's website.

Assurance standards keeping pace on non-financial reporting

Mar 23, 2021

On March 23, 2021, the International Auditing and Assurance Standards Board (IAASB) published an article by Chair Tom Seidenstein, IAASB Chair, on how it supports the application of ISAE 3000 (Revised).

At its March 2021 meeting last week, the IAASB approved Non-Authoritative Guidance on Applying ISAE 3000 (Revised) to Extended External Reporting (EER) Assurance Engagements. This guidance marks a significant step forward in supporting the evolving field of assurance for non-financial reporting. To help stakeholders understand the role of both the guidance and ISAE 3000 (Revised), which is the IAASB’s authoritative pronouncement, IAASB Chair Tom Seidenstein published an article detailing the guidance and how it supports the application of ISAE 3000 (Revised), growing demands for non-financial information reporting and assurance thereon, and the IAASB’s ongoing commitment to the consistent performance of quality engagements. The guidance will be published in April.

Review the press release on the IAASB's website.

CAQ releases highlights of October 2020 joint meeting with the SEC Staff

Jan 22, 2021

On January 22, 2021, the Center for Audit Quality (CAQ) published highlights of the October 21, 2020, CAQ SEC Regulations Committee joint meeting with the SEC staff.

Topics discussed at the meeting included:

  • Transition questions regarding the SEC’s amendments of Regulation S-K, Items 101, 103, and 105.
  • Implementation questions regarding final amendments to Regulation S-X, Rules 3-05 and 3-10.
  • Observations on COVID-19-related disclosures.
  • Acquiree financial statements (Rule 3-05) that reflect an accounting policy election to use a risk-free discount rate to account for leases under ASC 842, Leases.
  • Determining the numerator for the income component of the income test in connection with the disposition of a business.

Review the highlights on the CAQ's website.

Communicating Key Audit Matters in the Auditor’s Report

Apr 28, 2021

On April 28, 2021, the Auditing and Assurance Standards Board (AASB) released new resources to support the communication of Key Audit Matters (KAM) in the auditor’s report and help auditors work with their clients.

Communicating key audit matters (KAMs) is the biggest change in the auditor’s report we have seen in the last decade. Canada is now in the last phase of its enhanced auditor reporting project.

The AASB released three new pieces of non-authoritative guidance: Lessons Learned, Roadmap, and FAQ.

These resources are particularly important for small and medium-sized firms communicating KAMs for audits of financial statements for periods ending on or after December 15, 2022.

Review the press release and resources on the AASB's website.

CPAB 2021 Audit Committee Forums

Apr 08, 2021

On April 8, 2021, the Canadian Public Accountability Board (CPAB) announced its annual audit committee forums that bring audit committee chairs and chief financial officers (CFOs) together to discuss current audit quality matters and to share experiences on common issues.

Here are the 2021 forum dates:

Audit Committee Forum (French - all industries)

  • June 10, 2021, 2 PM-3:30 PM

Audit Committee Forum (English - all industries)

  • June 17, 2021, 2 PM-3:30 PM

Cannabis Industry Forum

  • June 22, 2021, 2 PM-3:30 PM

Real Estate Industry Forum

  • September 14, 2021, 2 PM-3:30 PM

Mining Industry Forum

  • September 23, 2021, 2 PM-3:30 PM

Energy Industry Forum

  • September 29, 2021, 2 PM-3:30 PM

All forums will be held virtually. Register for these events on the CPAB's website.

CPAB audit quality insights report: 2020 Annual audit quality assessments

Mar 30, 2021

On March 30, 2021, the Canadian Public Accountability Board’s (CPAB) released its Audit Quality Insights Report that features common findings and highlights several audit quality matters that impact audit committees, regulators and investors.

CPAB's 2020 findings show mixed inspection results. While the overall level of significant findings has decreased slightly, they encountered significant inconsistency in the quality of audits performed between different firms.

Four annually inspected firms met the target of no more than 10 per cent of files inspected with significant findings. Seven other firms had unacceptably high finding levels. Targeted escalation and enforcement measures are being undertaken to address specific instances of breaches of auditing standards or the professional code of conduct. Two restatements have been required to date.

The global economic and workforce disruption gave rise to critical accounting and auditing issues and challenged auditors to adjust to performing audits and overseeing that work remotely. As audits are performed remotely and business challenges persist, continued application of due care must not be compromised.

CPAB encourages public accounting firms to provide this report to their reporting issuers’ audit committees. Audit committees should discuss this report, any file-specific findings and any remediation action taken, if applicable, with their external auditor.

Review the report on the CPAB's website.

CPAB Exchange: Auditing in the cannabis sector

Feb 26, 2021

In February 2021, the Canadian Public Accountability Board (CPAB) released a publication that highlights their inspections findings in the cannabis industry and emphasizes the need for immediate action to improve audit quality.

Since its legalization in Canada in 2018, the cannabis industry has seen unprecedented volatility in the capital markets. At the time of this publication, there are more than 250 Canadian reporting issuers in this sector. Over the past two years the CPAB has reviewed the quality of audits of cannabis companies to better understand how auditors have adapted to the challenges in this emerging industry.

Review the publication on the CPAB’s website.

Fraud, going concern, and the expectation gap

Jun 03, 2021

On June 3, 2021, the Auditing and Assurance Standards Board (AASB) released an article on how they are working to better understand the expectation gap between the perception of the auditor’s role and their responsibilities in a financial statement audit.

Although the external audit is only one element within the broader financial reporting ecosystem, the auditor’s role in audits of financial statements continues to receive heightened public attention.

Review the article to learn more about their outreach initiatives and watch a video excerpt on the AASB's website.

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